Monday, December 29, 2008

1. Everyone knew something was fishy with his fund, including the people who got burned. After all, his amazing results were totally unreproducible by anyone else who tried to implement his so-called investment strategy. Investors assumed that he was making his profits by ripping off the non-Jews (e.g., drugs, prostitution), never dreaming that he was ripping off other members of the Tribe. As my father of blessed memory used to say, "Never do business with dishonest people."

2. I asked the head of a well-known Jerusalem institution of Jewish learning whether his organization had invested money with Madoff. "No way," he responded in shock. "Our bylaws would never allow us to invest in such a fund." So, before you mail out your YomKippur charitable contributions this year, ask what sorts of regulations the institution has to control where the money is invested.

3. A friend asked me, "Is this Madoff guy frum (loose translation: an Orthodox Jew)?" I responded, "Unless they've removed 'Thou shalt not steal' from the Ten Commandments, obviously not ." When defining whether someone is part of the Torah-observant community, we all too often look at the external trappings (e.g., Sabbath observance, eating kosher), and give people a free pass on moral or interpersonal transgressions. We're amazed that an observant, kosher-eating, Sabbath-keeping Jew could steal, but we never for a moment consider stripping him of the title "observant". This too is an aberration that provides fertile ground for Madoffs to flourish.

4. I want to conclude with something nice about Madoff, based on the Talmud. "Rabbi Abahu said in the name of Rabbi Lazar: We must be grateful to the cheaters among those who collect charity. Were it not for those cheaters, then each time a beggar asked a man for a donation, and the man refused to give, then that man would immediately be liable to punishment." (Jerusalem Talmud, Pe'ah 8:9).אמר רבי אבהו אמר רבי לעזר: צריכין אנו להחזיק טובה לרמאין שבהן, שאילולא הרמאין שבהן היה אחד מהן תובע צדקה מן האדם ולא נותן לו מיד היה נענש. (ירושלמי פאה, פרק ח, הלכה ט)I'd say that Madoff has given a free pass for years to come to anyone who refuses to donate to Jewish charities.

Sunday, December 28, 2008

One day, as the Ba'al Shem Tov was strolling through the town square, he came upon Mendel the water carrier, struggling under the burden of two full barrels of water. “How are you today, my friend?” asked the Baal Shem Tov. Gasping for air, Mendel responded gruffly, “How could I be anything but terrible? Look what a miserable profession I have! I must carry these heavy buckets for miles from the river, uphill all the way. Then, when I get to town, I have to haggle with customers to earn a few kopeks. And I’m not getting any younger. Soon I will be too old to carry water. What will become of me then? What a cursed existence!” And with that, Mendel shuffled by the Ba’al Shem Tov, looking for customers.

The next day, the Ba’al Shem Tov again saw Mendel in the town square, carrying buckets of water. Undeterred by yesterday’s tongue lashing, the Ba’al Shem Tov inquired “How are you today?” Mendel smiled and replied, “Thank G-d, Rebbe, I am fine. And why not? The sun is shining, I have been granted the health to pursue an honest living, and I earn enough to support my family.” And with a spring in his step, Mendel strolled through the square.

The Ba’al Shem Tov called out, “Mendel, I want to thank you, for you have taught me a great lesson.” Mendel put down his buckets and listened as the Ba’al Shem Tov explained. “On the one hand, we believe that G-d grants a person his livelihood for the year on Rosh Hashana, the Jewish New Year. On the other hand, we pray to G-d every morning that He should grant us our livelihood. How are we meant to reconcile this contradiction? Observing you, Mendel, I now understand. G-d indeed grants us the amount of our livelihood for the entire year on Rosh Hashana. But, how will we earn that livelihood? Will we suffer through every moment, hating our lot in life, wishing the day was done? Or will we enjoy the effort and be glad for the opportunity to do an honest day’s work? For that, a person must pray for G-d’s grace every day. Mendel, I want to bless you – may you merit, each and every day, to earn your livelihood with the same joy that you feel today.”

Friday, December 26, 2008

The first time I used a traditional Jewish story in a business setting was at my company's annual strategy conference. As I strode to the podium to present the new technologies we were developing in our labs, and looked out at my fellow managers who had gathered in Seville, Spain from our corporate offices all over the globe, I knew that research was the last thing on their minds. The company had recently gone public, and the stock that had been issued at $20 was rapidly approaching $100. My colleagues wanted to hear about products that could keep investor momentum going, not high-risk inventions that, if they panned out, would take years to come to market.

I decided to try an unconventional approach. "I've come to Spain from our Israeli office, so I'd like to begin with a Jewish Spanish story. Almost one thousand years ago, in Moslem Spain, there lived a Jew named Rabbi Samuel the Prince. He was very wise, and rose to great power, becoming the Sultan's treasurer. This aroused the jealousy ,of the other ministers, who planted rumors that Rabbi Samuel was embezzling money from the royal treasury.

The Sultan decided to put Rabbi Samuel to the test. One day, without warning, he called for Rabbi Samuel, and asked him to make a complete accounting of his personal wealth. Rabbi Samuel was taken aback, but he could not refuse the Sultan's request. He sat at a table, asked for a quill and parchment, and began writing feverishly. After half an hour, he stopped, reviewed the list silently, and handed it to the Sultan.

The Sultan read the inventory carefully, and slammed it down angrily on the table. 'Why, this is only a fraction of your wealth. I personally have given you far more than what you list here as your salary. This is a brazen lie! My advisors are correct – you have been dishonest with me in your monetary affairs. I shall personally confiscate everything you own. Guards, take this man away!'

'Your Majesty', responded Rabbi Samuel, 'you asked me for an accounting of my wealth. As you can plainly see, my worldly possessions are not truly mine. At any time, they could be taken from me by robbers, war or natural disaster. In fact, your Majesty has just taken them from me with a single command.’

‘The only possession I truly own is that money which can never be taken from me – the money I have given to charity. You see, a Jew is commanded by the Torah to give one tenth of his income to those in need. The figure I gave you, your Majesty, was the total of all the moneys I have given to charity. That is my true wealth, for the benefit from that money remains mine forever, and can never be taken from me.'

The Sultan was impressed by this profound truth, and promoted Rabbi Samuel to even greater power in his kingdom."

I paused for a moment and looked around at my attentive audience. "Rabbi Samuel has hit upon a fundamental aspect of human nature – we are easily confused between what is truly ours and what others grant us. The same is true of corporations. Our stock price is soaring, but that is something that is granted by investors, and could be taken away from us tomorrow by those very same investors, based on factors that are entirely out of our control. What, then, is truly ours? It's our loyal, highly skilled employees, and the passion and innovation that they bring to their jobs. They are our true strategic assets, and they are what will keep us successful for years to come. I'd like to present to you some of the new product ideas they've come up with."

From the contemplative faces of my fellow managers, I could see that my unorthodox introduction had succeeded. It wasn’t me who had convinced them that the subject was important – they had convinced themselves, by internalizing a story steeped in tradition and wisdom.

Since then, I've used traditional Jewish stories, especially Hasidic tales, in a variety of management contexts: to motivate teams, to impart a lesson to a fellow manager, to grab an audience's attention. Almost always, I've found that the message gets across. Why Hasidic stories? Because the Hasidic tale has a world of timeless insight and wisdom for the modern business world. The Hasidic Masters were exceedingly wise leaders who understood the human heart. They used stories as a medium to transmit values and stimulate insights on the part of their followers. By emphasizing the human perspective, Hasidism transformed and enriched the Jewish establishment of its time. We cannot speak with the Masters directly about management issues, but the insights of the Hasidic perspective can provide important lessons for today’s business world.

Hasidism is a Jewish mystical movement founded in the 18th century by Rabbi Israel, the Ba’al Shem Tov (Master of the Good Name). This revolutionary movement emerged in response to the crises of its time, in the aftermath of the Cossack massacres and mass disillusionment with false Messiahs. Some rabbis of the era suspected Hasidism of being yet another dangerous messianic movement and went to great lengths to oppose its spread.

The genius of Hasidism, and the secret of its success, lay in its ability to supplement rather than subvert Rabbinic Judaism. Hasidism did not negate the values of the rabbinic establishment – but it equally emphasized other values. It recognized the tension between the letter and the spirit of Jewish law, and looked for a balance that gave legitimacy to the ethical intent of legislation, even when this required bending the letter of the law. It was anti-elitist, valuing sincerity and devotion over erudition or wealth. The poor and unlearned Jew became a heroic figure who could move the heavens with prayer. It established the role of the Tzaddik (righteous one) or Rebbe (master) to provide inspiration and guidance in both spiritual and worldly matters. It employed the powerful means of stories, parables, and anecdotes to transmit wisdom. Hasidism succeeded where other Jewish sects failed because it was an evolutionary as well as a revolutionary movement.

There are striking parallels between the circumstances that catalyzed the Hasidic revolution and the world of business today. In modern business, the inherent tension between the “letter of the law” and the “spirit of the law” expresses itself in choosing between maximum shareholder profits, even if only temporarily and on paper, and ethical behavior; Hasidism looks for a balance that respects both. With each new corporate scandal, the public has grown increasingly hostile towards senior managers; Hasidism sought to narrow a similar schism by elevating the value of the common man. Today’s senior managers aspire to provide inspirational leadership that can give employees a vision of where they are going and why they want to get there; Hasidism provides us with vivid examples of such leadership. Rather than advocating a humanistic revolution in management, Hasidism teaches that new people-oriented values can successfully be fused with existing business practices in an evolutionary process.

My goal in writing this book is to share with you some of my favorite stories, from Hasidic and other traditional Jewish sources, stories that have important leadership lessons for the modern business world. I have organized the tales in this book according to the management functions suggested by Peter Drucker in his classic analysis Management: Tasks, Responsibilities, Practices: motivating and communicating, setting objectives, organizing the group, measuring performance, developing people, and managing the outside world. The tales in this book provide insight into each of these roles of management. I have also included modern business examples of the principles illuminated by the stories. I do not presume to call this a comprehensive management program, but I hope you will find the stories thought-provoking, especially about your own management style.

There is a well-established genre of business books that looks for wisdom from eclectic sources. So, though you may have already studied management at the feet of other masters - learned the art of war from Sun Tzu, gleaned leadership secrets from Attila the Hun, and admired the strategic insights of Machiavelli’s Prince - I invite you to savor and be inspired by the management wisdom of the Hasidic Rabbis. Rabbi Jacob Kranc (pronounced Krantz), a well-known teller of Jewish fables known as the Magid (Preacher) of Dubno, was my distinguished ancestor, so perhaps story-telling is an inherited family occupation. In honor of the 200th anniversary of the passing of the Dubno Magid, and to mark my own 50th jubilee year, I have written this book to share with you the business world in which I want to live, a world inhabited by enlightened, humanistic managers.

About Me

Moshe Kranc has worked in high-tech for 30 years, with 20 years in management positions in both the United States and Israel.
Moshe was part of the Emmy-award-winning team that designed the scrambling system for DIRECTV and holds 5 patents in areas related to pay television and computer security. He lectures at the Jerusalem College of Technology and Bezalel Academy, has published numerous technical articles, and was a member of The Association for Computing Machinery’s Committee on Scientific Freedom and Human Rights.
Storytelling is part of Moshe’s heritage – family tradition has it that he is descended from Rabbi Jacob Kranc, the Magid of Dubno, an 18th century itinerant preacher known as “the Jewish Aesop.” For many years, Moshe has enjoyed collecting, reading and re-telling Hasidic stories to family, friends and colleagues. He has a unique perspective on the juncture of high-tech management and Hasidic tales, and the imagination to believe that they have something in common.